Porsche on Track to Hit Profit Target
Sports-car maker benefiting from strong sales, currency gains
STUTTGART, Germany—German sports car maker Porsche AG expects to meet its 15% pre-tax profit targets this year, said Chief Finance Officer Lutz Meschke.
The Stuttgart-based sports car maker expects a “significant triple-digit million” windfall from currency gains to boost pretax earnings this year, allowing the company to meet its target, Mr. Meschke said in an interview.
“We’ve taken the currency gains in the first half of the year and have continued to record orders at a high level. That’s why I expect that we will have higher profit at the end of the year.”
Mr. Meschke went beyond previous statements about the company’s performance in 2015. Until now, Mr. Meschke has said the company would have to work “damn hard” to achieve a 15% pre-tax return. Now, he expects currency gains and higher sales to allow the company to meet its target.
Though hugely profitable, Porsche’s margins have been hit in recent years, falling from 19% just a few years ago, on higher costs to meet European emissions standards and its expansion into less profitable sport-utility vehicles.
Porsche, which is owned by Volkswagen AG, reports earnings for the first half of the year on July 29.
Mr. Meschke, who is also responsible for the company’s information technology, said Porsche is accelerating development of digital businesses and could make acquisitions of technology startups to acquire expertise or technology.
At the Frankfurt Motor Show in September, Porsche will unveil an updated version of its 911 sports car with new engines and a new communication system. It will pre-install Apple Inc.’s CarPlay in the 911 sports-car upgrade and install CarPlay in all future Porsche models.
“We’ve realized that 80% of Porsche customers are Apple iPhone users,” said Mr. Meschke.
Porsche has no current plans to install Android Auto in its cars, Mr. Meschke said.
So far this year, Porsche new car sales are up 30% to 113,984 vehicles world-wide, driven by strong sales of the 911 and the company’s Cayenne and Macan SUVs. This is the first full year of availability of Macan compact SUV. Last year, Porsche sold 189,949 new cars world-wide.
“We will sell more than 200,000 new cars in 2015,” Mr. Meschke said.
Porsche posted hefty sales gains in the U.S., Europe and China in the first half of the year. But Mr. Meschke warned that conditions in China are changing significantly.
Chinese government pressure on car makers to cut prices and customer preferences for fewer features and less powerful engines are hitting profits. Porsche has felt the pressure on sales of its Panamera sedan. Dealers this year have had to cut Panamera prices in China between 15% and 20%, Mr. Meschke said. Prices for other Porsche models have remained stable.
“Profits in China are clearly declining and will continue to decline in the future,” he said. “These are trends that no one saw coming two years ago. You have to react and so we are developing other markets faster than we had expected to do two or three years ago.”
Porsche is expanding its dealerships in Taiwan and South Korea even though it still expects strong growth in China.